Question How much should you be spending for housing expenses?
Answer 25% – 35% of your take-home pay.
Complete Answer “How to” rent an apartment or buy a house is beyond the scope of this blog. This post is intended to help you determine if you can afford the rent and/or mortgage for a place to live.
From the post of July 25, 2016, the recommended amount for monthly housing expenses is 30%, it may vary between 25% and 35%, of your take-home pay. Housing Expenses include all the expenses for a place to live. In addition to the amount you pay for rent or a mortgage each month, it includes the monthly cost for utilities, cable/satellite/Internet service, cell phone, insurance, repairs/maintenance, parking, et cetera.
Please Note: Being “homeless” is just as bad as it sounds. In times of financial crisis, your home should be the very last thing that you give up. If you have to live with a friend or family member until you are back on your feet and can find a place of your own, you should offer to pay them 25% of your take-home pay. Most likely, your friend/family member will refuse. If they accept your offer or not, you should keep them informed of your progress of saving money and finding a place of your own and when you plan to move out.
Long-term Goal: If you decide that you want to be a home owner, your long-term goal should be to pay off your mortgage before you retire. Please note, that even if you have a home that is paid off, you will still have property taxes, insurance, and maintenance and repair expenses.
Financial Literacy Knowledge/Skill
Your total Housing Expenses should be between 25% and 35% of your monthly take-home pay.
Comments or Questions
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Next week’s topic: How much should you be spending for a car?